Parent moving in - bills contributions and 'surplus income'

badmemory

POAs are vital, sooner rather than later.  Otherwise you could find him suddenly hospitalised & having no say what happens then.  Also any financial arrangement should be totally clear from the outset.  Household contributions & gifts should be totally separated & recorded.  This is for your own protection as well as his.  So much better not to have any muddy waters around.  It also saves he said she said arguements down the line.

Mojisola

I would be working out the household bills and paying half each.

He could be paying towards a cleaner and/or gardener, if that would help you - he'd have been paying for help at home if he hadn't moved in with you.

If he wants to gift you a lump sum, do it sooner rather than later. 

I think you might be overthinking all the other stuff.

While keeping an eye on his capital in case he does need residential care, don't get too hung up on things.

sorethumbs1992

Keep_pedalling said:

sorethumbs1992 said:

He has made a will after a divorce several years ago and I'm the only child and beneficiary. He has about 240k in savings. With house being sold for further 200k. So although that is then over the 350k IHT I think there is something regarding owning a house or having sold a house which adds 150k to the IHT threshold so 440k should come in below that. As a former farmer he does still have several fields so I'm not sure how that gets calculated. I believe agricultural land does get a zero exemption for IHT if criteria is met. 

So I guess yes we could ignore gifting and he could in theory give me a lump sum as IHT wouldn't kick in. But then I don't want to do that if care costs are going to develop further down the line as then any lump sums are going to be queried. 

The only reason I was thinking of gifting excess income is that I'm not then reducing any capital when it comes to potential care fees. They can't accuse me of stripping capital if it's not being reduced at all. 

My father does receive the lower attendance allowance already but I've not yet applied for powers of attorney as I'm not sure if receiving money from him from either gifting or household contributions conflicts with duties of POA and might be seen as using those powers for my own gain

Your fathers estate will have exemptions of £500k as you will still be able to claim his residential NRB under the downsizing rules, so that is considerable below the point of where it kicks in. If he wants to make you a one off gift then it is not going to impact his ability to pay for care costs. In his shoes, assuming you are his only child, then I would certainly be looking at retaining  at least £350k and gift some of the rest.

Please don’t put off getting him to make LPAs especially for finance while he still has his full mental faculties, it really is vital that it is in place just in case you need to use it.

This is where I am a bit confused.

Yes it is under the IHT threshold so he could really do what he wants but I don't really understand the part that a one off gift would not impact on potential care costs.  Surely any large donation that reduces his capital would be investigated should he ever go in to care.  Yes he may only have 350K instead of 400K after gifting a lump sum but they are surely going to want to know where the missing 50K went??

RAS

Two things would matter here.

Was the £50k gift given for the express purpose of avoiding care fees?
Was the donor left with a reasonable sum with which to fund any care that might be reasonably foreseen to be needed in the future?

He should be paying half the household costs anyway, and if you need any adaptations, from mobility aids to door widening, ramps or stairlifts, he should pay for those, sooner rather than later. If you go on holiday together, he might even pick up the whole tab if he couldn't go on his own,

Beyond that, remember only about 15%of the elderly go into care homes, many more have support at home.

sorethumbs1992

At the moment he is just paying for food and personal things while we are in process of selling his house.  I will look at more of sharing costs once that is settled.
No gift of any capital has been made yet, that is why I've been asking on this forum.  We've discussed a gift to pay off some of my mortgage which hasn't been considered just for avoiding care costs, he just has money and wanted to help out.  
So IHT will be under the limit so he can gift what he wants.

But again its been said he can gift if he has...
'a reasonable sum with which to fund any care that might be reasonably foreseen' and 'If he wants to make you a one off gift then it is not going to impact his ability to pay for care costs'

Those points seem to be so unclear, who decides how much is a reasonable amount for care costs

RAS

Do you or any of the professionals dealing with your dad think he needs to go into care in the next 3-5 years?

How much would say 3 years care cost locally, it varies a lot across the country? 

Keep_pedalling

sorethumbs1992 said:

Keep_pedalling said:

sorethumbs1992 said:

He has made a will after a divorce several years ago and I'm the only child and beneficiary. He has about 240k in savings. With house being sold for further 200k. So although that is then over the 350k IHT I think there is something regarding owning a house or having sold a house which adds 150k to the IHT threshold so 440k should come in below that. As a former farmer he does still have several fields so I'm not sure how that gets calculated. I believe agricultural land does get a zero exemption for IHT if criteria is met. 

So I guess yes we could ignore gifting and he could in theory give me a lump sum as IHT wouldn't kick in. But then I don't want to do that if care costs are going to develop further down the line as then any lump sums are going to be queried. 

The only reason I was thinking of gifting excess income is that I'm not then reducing any capital when it comes to potential care fees. They can't accuse me of stripping capital if it's not being reduced at all. 

My father does receive the lower attendance allowance already but I've not yet applied for powers of attorney as I'm not sure if receiving money from him from either gifting or household contributions conflicts with duties of POA and might be seen as using those powers for my own gain

Your fathers estate will have exemptions of £500k as you will still be able to claim his residential NRB under the downsizing rules, so that is considerable below the point of where it kicks in. If he wants to make you a one off gift then it is not going to impact his ability to pay for care costs. In his shoes, assuming you are his only child, then I would certainly be looking at retaining  at least £350k and gift some of the rest.

Please don’t put off getting him to make LPAs especially for finance while he still has his full mental faculties, it really is vital that it is in place just in case you need to use it.

This is where I am a bit confused.

Yes it is under the IHT threshold so he could really do what he wants but I don't really understand the part that a one off gift would not impact on potential care costs.  Surely any large donation that reduces his capital would be investigated should he ever go in to care.  Yes he may only have 350K instead of 400K after gifting a lump sum but they are surely going to want to know where the missing 50K went??

It’s really not how much you give away that counts but how much you retain, we have both given away 6 figure sums over the years but have plenty to fund several years in a care home if needed. No one is going to ask where that £50k went I’df he still has enough to fund 6 years of residential care, and with those sort of assets you don’t have to go though the LA system you can choose any care home you wish privately.

badmemory

But POAs are vital.  The local hospital wouldn't tell us what was wrong with our mother until we waved one under their noses.

sorethumbs1992

Keep_pedalling said:

It’s really not how much you give away that counts but how much you retain, we have both given away 6 figure sums over the years but have plenty to fund several years in a care home if needed. No one is going to ask where that £50k went I’df he still has enough to fund 6 years of residential care, and with those sort of assets you don’t have to go though the LA system you can choose any care home you wish privately.

Thank you.
I think I was confusing myself in thinking LA's would be scrutinising assets or gifts immediately but of course any funds would pay for private care home first.
If that were to happen and he had enough for 5 or 6 years privately and then the funds for private care home ran out I guess LA would then have to take over care.  And would they look back and see oh he gave away 50K, he could have paid for himself for another year without our help and start chasing any big gifts?

All hypothetical I guess

And I understand these POA's are important but if he was going to gift money and I had financial POA does that not cause some kind of conflict, in that I could be making personal gains?

Keep_pedalling

sorethumbs1992 said:

Keep_pedalling said:

It’s really not how much you give away that counts but how much you retain, we have both given away 6 figure sums over the years but have plenty to fund several years in a care home if needed. No one is going to ask where that £50k went I’df he still has enough to fund 6 years of residential care, and with those sort of assets you don’t have to go though the LA system you can choose any care home you wish privately.

Thank you.
I think I was confusing myself in thinking LA's would be scrutinising assets or gifts immediately but of course any funds would pay for private care home first.
If that were to happen and he had enough for 5 or 6 years privately and then the funds for private care home ran out I guess LA would then have to take over care.  And would they look back and see oh he gave away 50K, he could have paid for himself for another year without our help and start chasing any big gifts?

All hypothetical I guess

And I understand these POA's are important but if he was going to gift money and I had financial POA does that not cause some kind of conflict, in that I could be making personal gains?

No, that would only be the case if an attorney did it after the donor lost mental capacity. Our LPAs have been in place for several years in which time the attorneys have been given significant gifts but they have never had to use their powers, the LPAs are sitting there just in case, we still have full control over our finances and. Are the ones who make the decisions.

Should your father suddenly lose his mental capacity through accident or illness before making an LPA then the only way to handle his financial affairs would be to apply for deputyship which is long winded and expensive.